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Home / Questions / CBS Corporation sells€124,000 of 8% bonds on March 1, 2019. The due date of the bonds is February...

CBS Corporation sells€124,000 of 8% bonds on March 1, 2019. The due date of the bonds is February...

CBS Corporation sells€124,000 of 8% bonds on March 1, 2019. The due date of the bonds is February 28, 2022. CBS Corporation pays interest semi-annually on August 31 and February 28. The effective-interest rate is 10%.

On September 1, 2020, CBS Corporation buys back€49,600 (face value) worth of bonds for€48,200.

Instructions

  1. Compute the issue price of the bonds. (Round to the nearest euro.)

  1. Prepare a bond interest and premium/discount amortization schedule using the effective interest method until August 31, 2020 (included).

  1. Prepare all of the relevant journal entries from the time of sale until the date of buyback (included). Amortize premium or discount on interest dates and at year-end. The accounting year ends December 31.

Apr 11 2020 View more View Less

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